A high-stakes clash over millions in business interruption coverage has erupted between hotel owners and a powerhouse lineup of insurers, with accusations flying over denied claims and policy ambiguity.
In a complaint filed September 30, 2025, in the United States District Court for the Southern District of Indiana, Amalgamated Hospitality Management II, NR Hospitality, LLC, doing business as Brandywine Plaza, and Delaware Hotel Associates, LP, allege that a group of major insurance companies failed to honor their obligations after a water leak at the Brandywine Plaza Hotel in Claymont, Delaware.
The incident, which occurred on or about October 5, 2024, began when a four-inch domestic water line breached inside the hotel, releasing approximately a foot to a foot and a half of water into the basement. The complaint details how the water impacted the property’s electric transformer, caused the loss of power and water, and damaged the fire sprinkler system pump, fire alarm controls, and HVAC system.
According to the hotel owners, the insurance policy in place was supposed to provide coverage for damage to the property, contents, and loss of business income and extra expense resulting from a covered cause of loss. The plaintiffs state that the policy’s Accord form under Coverage Information had the box for “Business Income” filled in and checked “Yes,” with “$0.00” written under “Limit” and “Actual Loss Sustained” noted as “# of months.” Plaintiffs allege this meant they were fully insured for loss of business income.
When the owners submitted their claims—first for a preliminary six-month business income loss totaling over $825,000, then for a nine-month analysis totaling approximately $1,500,000—the insurers did not fully pay. The complaint states that while four of the participating carriers paid some portion of the business income loss claim, Lloyd’s, CNA, Rokstone, and Beazley failed and refused to pay their obligations. The insurers, according to the complaint, argued that because the policy did not specify a dollar limit for business income coverage, no such coverage existed.
The complaint alleges breach of contract, estoppel, and bad faith. Plaintiffs claim they relied on the insurers’ representations and would have taken different actions had they known there was no business income loss coverage. They further allege that the insurers’ refusal to pay was arbitrary, intentional, and in willful and wanton disregard of the terms of the policy.
Central to the dispute is the language in the policy’s Accord form, which the plaintiffs say supports their interpretation of full business income coverage. The complaint also references the policy’s jurisdiction clause, which states that Indiana law governs the construction and interpretation of the policy and that the parties submit to the exclusive jurisdiction of Indiana courts.
Plaintiffs assert that their damages exceed several million dollars and are seeking compensatory damages, attorneys’ fees and costs, delay damages, punitive damages, and pre-judgment and post-judgment interest. The outcome of this case could be significant for the commercial insurance sector, particularly regarding business interruption claims and multi-carrier policy arrangements.
As this is a newly filed complaint, all allegations remain unproven, and no final decision has been made. The case highlights issues of policy interpretation, insurer obligations, and claims handling in commercial property and business interruption insurance.
